Italian voters have choice: devil or deep blue sea

Commentary: ‘Technocrat’ Monti leaves fragmented landscape

WASHINGTON (MarketWatch) — The announcement this weekend of Italian Prime Minister Mario Monti’s imminent resignation did not mark the end of the world as we know it, and after an initial bout of nervousness Monday, the markets wisely decided not to treat it as such.

After all, the resignation of a commissar appointed by Brussels so that a democratic nation could now be free to elect its own leaders should not really be a cause for alarm in Europe.
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Much of the fulsome praise lavished on Monti for implementing a program of austerity in Italy was self-serving justification by Europe’s political elite for the orthodox neo-liberal economic policy they have imposed on the continent.

And the worry expressed by many that Monti’s resignation would usher in some “instability” in Europe must have seemed ironical to those in countries wracked by protests and riots and millions of lives ruined by unemployment and new poverty.

The main source of concern, it seems, was that former Italian Prime Minister Silvio Berlusconi, like Napoleon coming back from Elba, was returning to politics and might gain power once again.

Instead, current polls show the center-left Democratic Party of Pier Luigi Bersani as the dominant political force, with support from about 30% of the electorate.

Bersani, who previously belonged to Italy’s once-powerful Communist Party, has pledged to support the deficit-reduction measures favored by Berlin and Brussels, putting him in the camp of tame leftists like French President François Hollande and the leaders of Greece’s Pasok party.

Reuters

Goodbye Mario!

These politicians are quick to toe the line on austerity because that is the condition of them not being “primaried” — to borrow the term from U.S. politics for when the Tea Party doesn’t find a Republican sufficiently orthodox and fields a more suitable replacement in primary elections — by those pulling the strings in Brussels.

That is why the quirky Five Star Movement, an anti-euro protest party launched by comedian Beppe Grillo, is currently second in the national polls with nearly 20%, as the main political group opposing austerity. Berlusconi and other center-right parties divide up much of the rest of the vote.

It is this very fragmentation, against a backdrop of a worsening economy, that creates the biggest uncertainty in the coming election.

For all the calm Monti brought to the Italian front in his year-long tenure, his austerity policies have plunged Italy into its own recessionary spiral.

New figures out this week showed Italy’s gross domestic product down 2.4% from the year-ago period — the fifth quarterly decline in a row — and industrial production off 1.1% in October from the previous month – the 14th consecutive monthly decline. Everyone from the OECD to the Italian business lobby Confindustria is revising their forecast for next year downward.

Under Monti, unemployment in Italy has risen to more than 11% and youth unemployment tops 36%, with countless more young Italians leaving the country for better opportunities elsewhere.

The austerity policies, designed to reduce the deficit by raising taxes and reducing government spending, are having trouble reaching their deficit targets as a declining GDP keeps moving the goal posts, while Italy’s debt-to-GDP ratio has swollen to an estimated 126% this year.

“Technocrat” Monti is being coy about whether he will show his true political colors and run at the head of one of Italy’s fragmented conservative parties.

Bersani, not surprisingly, is urging him not to run so he can preserve his status as a neutral force for further “service.” It is doubtful in any case that Monti, whose favorability rating slumped to 33% in the most recent polls, could win sufficient electoral support to return as prime minister.

For now, the incipient panic over Monti’s imminent departure has abated, though there is still some worry among investors about the uncertainties posed by the election.

While Berlusconi seems to be a spent force and his moral turpitude has alienated many voters, he has a keen political ear for the frustration and anger that many Italians feel and may still be capable of mobilizing a substantial following or at least stirring the pot.

So Italian voters, who have suffered under an unelected government for a year, will have a choice in February that probably seems a lot like the one between the devil and the deep blue sea. And, who knows, many of them may choose the devil they know.

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